The Chief Economist's Note Archives - Capital Economics

Category: The Chief Economist’s Note

Global inflation outlook more complicated than polarised debate suggests

Posted by Neil Shearing | Category : The Chief Economist's Note.

It sometimes feels as though there is little more to be said about the outlook for inflation, such has been the volume of ink spilt on the subject in recent weeks. However, much of the discussion has tended to miss important nuances in the situation faced by different countries. Two points are worth keeping in … Continue reading “Global inflation outlook more complicated than polarised debate suggests”

How macroeconomics will drive FX markets coming out of the pandemic

Posted by Neil Shearing | Category : The Chief Economist's Note.

Our new FX Markets service, which we launched last week, brings a fresh approach to analysing currency markets by looking at them through a macro lens.  Currency markets are notoriously difficult to forecast. This is partly because of the need to anticipate moves on both sides of the exchange rate. For example, forecasting moves in … Continue reading “How macroeconomics will drive FX markets coming out of the pandemic”

As economies reopen, inflation fears are returning – here’s what to watch for

Posted by Neil Shearing | Category : The Chief Economist's Note.

The one theme that has dominated conversations with clients over the past few months is inflation and, more specifically, the possibility that it is about to take off. There are several strands to these concerns.  On one level, there are fears that a combination of persistently large government budget deficits, alongside an institutional softening of … Continue reading “As economies reopen, inflation fears are returning – here’s what to watch for”

Tackling climate change doesn’t mean sacrificing economic growth

Posted by Neil Shearing | Category : The Chief Economist's Note.

The climate summit hosted by President Biden last month produced a series of ambitious targets for cutting carbon emissions by major economies. This included the US itself, which pledged to halve emissions by 2030 relative to 2005 levels and achieve net zero emissions by 2050. What effect will all of this have on economic growth? … Continue reading “Tackling climate change doesn’t mean sacrificing economic growth”

Consensus catching on that this time is different

Posted by Neil Shearing | Category : The Chief Economist's Note.

It will be years, if not decades, until we fully understand the long-term economic effects of the pandemic. However, mainstream views about the economic legacy of COVID-19 are starting to shift. Whereas most commentators initially argued that the pandemic would permanently depress output, many are now rethinking their early assessments. Indeed, in its latest World … Continue reading “Consensus catching on that this time is different”

With push from the pandemic, globalisation era gives way to US-China decoupling

Posted by Neil Shearing | Category : The Chief Economist's Note.

We argued some time ago that globalisation had peaked but that the jury was still out on what form a subsequent period of deglobalisation might take. Two years and one pandemic later and it is starting to become clear what to expect.   The era of globalisation that turbocharged world growth in the 1990s and 2000s … Continue reading “With push from the pandemic, globalisation era gives way to US-China decoupling”

Why Europe will fall further behind the US in the post-pandemic recovery

Posted by Neil Shearing | Category : The Chief Economist's Note.

Our latest COVID Recovery Monitor reveals a growing divergence between the US economy, which is rebounding, and the euro-zone economy, which is faltering. This is evident in the usual activity data and business surveys, but also in higher frequency data, including our own mobility trackers. (See Chart 1.) Crucially, all the signs suggest that the … Continue reading “Why Europe will fall further behind the US in the post-pandemic recovery”

A commodities supercycle won’t be playing a role in inflation’s return

Posted by Neil Shearing | Category : The Chief Economist's Note.

Last week we published our latest Global Inflation Watch. It argued that a strong recovery in global GDP growth this year would be accompanied by a sizeable rebound in global inflation. One of the key drivers of the impending rise in inflation is the sharp increase in global commodity prices over the past year. The … Continue reading “A commodities supercycle won’t be playing a role in inflation’s return”

Global growth narrative set to shift as pre-pandemic legacy issues resurface

Posted by Neil Shearing | Category : The Chief Economist's Note.

Two major events have taken place in the world’s two largest economies over the past week. The first is the passage of President Biden’s $1.9trn stimulus bill in the US. The second is the meeting of the National People’s Congress in Beijing. Taken together, these have the potential to reshape the narrative around the post-pandemic … Continue reading “Global growth narrative set to shift as pre-pandemic legacy issues resurface”

If yields keep rising, expect an array of responses from global central banks

Posted by Neil Shearing | Category : The Chief Economist's Note.

A sense of foreboding continues to haunt global bond markets. Having dropped back at the start of last week, government bond yields then rose again in the middle of the week and the bond sell-off intensified on Thursday and Friday. It is important to get matters into perspective: despite recent moves, yields everywhere remain low … Continue reading “If yields keep rising, expect an array of responses from global central banks”